Will Amazon’s Prime Day Ruin Christmas? 5 Unexpected Ways It’s Already Changed Retail
What do you give a company that has everything? Amazon, the world’s largest retailer with nearly 200 million unique monthly visits, wants more of your spending — now. Why wait for a holiday?
Prime Day, when the world’s largest retailer offers Prime subscribers thousands of items at reduced prices, is the gift that keeps on giving for shoppers: Many major chains, from Target to Walmart, have counteredwith their own “Black Friday in July” sales. EBay has launched a “Summer Brand Outlet” microsite that includes “Hot Deals for Hot Days” through July 22, and a “Crash Sale” on July 15.
And customers are happy to celebrate early. While 70% plan to shop Amazon on Prime Day(s), July 15 and July 16, 44% plan to shop Walmart, and 40%, Target according to Bazaarvoice.
In fact, gift-giving is now a year-round occurrence no longer anchored in major holidays such as Christmas. Amazon Prime Day might not be the only retail event responsible, but its 2015 launch was a likely catalyst. Tens of millions of people became Prime members during the 2018 sale, Amazon has reported, during which it sold more than 100 million items.
Some Bloomberg facts:
- Amazon in 2018 generated nearly $235 billion in sales, accounting for 7.7% of all U.S. retail sales.
- Amazon commands 45% of all e-commerce sales, which were $524 billion in 2018 (eBay trails in second at 6.8%)
- Since introducing its Prime membership program in 2005, Amazon has registered more than 100 million paying members.
- In 2018, industry-wide July retail sales outpaced December retail sales — $447 billion and $443 billion. Prime Day is in July.
Amazon’s 5 Surprising Changes To Retail
All these numbers add up: Amazon, and Prime Day, have changed retail in unexpected ways beyond mid-summer shopping binges. Here are five such ways.
1. It’s flattening the spending calendar. Thanks to two-day free shipping and a widespread availability of once hard-to-find products, we simply do not wait for what we want anymore. If a Prime member feels like lobster tail, champagne and ice cream for dinner, he or she only has to wait three hours for Whole Foods to make the (free) delivery. Of those who plan to shop Prime Day, 49% expect to get a jumpstart on holiday purchases, while 28% of those with children will buy back-to-school items, according to research by Valassis, a consumer marketing firm. Annual retail spending has steadily advanced to $6 trillion in 2018 from $2.85 trillion in 1998, before the internet boom, according to U.S. Census figures.
2. It made rental apparel, and everything, vogue. Amazon has made pretty much all other digital retail viable, enabling the development of online-only merchants (such as Warby Parker) and swap-or-rent sites including Rent the Runway. True, a glut of online retail surfaced in the late 1990s (Amazon was founded in 1995), but most failed. Others that succeeded include eBay, also launched in 1995, and Zappos (1999), which Amazon acquired in 2009 — the same year Rent the Runway emerged. Amazon’s influence is evidenced in this fact: One year after Amazon patented its one-click service, in 1999, Walmart launched its shopper website.
3. It buried a category killer, and brewed an industry. While Amazon’s prices and convenience slowly choked the life out physical book stores, coffee shops where customers could read off their laptops emerged from the ashes. Credit coffee retailers that spotted an opportunity in transforming their shops from pit stops to lounge areas. The U.S. coffee house market rose an estimated 41% from 2011 to 2017, to $23.4 billion, according to Mintel research. Starbucks locations alone blossomed to nearly 30,000 in 2018 from 1,000 in 1996.
4. It’s replacing cashiers with robot tech. If Amazon pursues its previously reported plan to open 3,000 cashier-free Amazon Go stores, we can count on other retailers to follow suit in some form. Combine this with self-checkout and the retail cashier will be less of an in-store standard. Retailers will need technicians, however, to maintain and fix the many computers and cameras required to follow, fulfill, track and ring up shoppers and their purchases. Research by Quartz found that in 2017, bookstores, grocery stores and clothing stores counted 170,000 fewer retail jobs. Meanwhile, Quartz estimated that Amazon added 75,000 robots to its workforce in 2017.
5. It made the in-store retail experience much better. Shoppers would never have been treated to vending machine-like shoe dispensers (DSW) or inventory-free stores (Nordstrom) if retailers were not forced to make their physical experiences more irresistible than online convenience. These efforts appear to be clicking among young shoppers: Gen Z consumers visit an average of 5.25 stores per week, new research shows. That compares with four stores among millennials and three across the general population.
These five changes may not all be considered a gift to retailers, particularly those that cannot match the competition. However, change will come one way or another, and Amazon’s influence undoubtedly is presenting opportunities for shoppers that will influence retail incrementally, today and every day beyond Prime Day.